What's going on?
Manufacturing firms around the world ended 2017 on a high note, according to a series of influential surveys published on Tuesday that measure monthly changes in industrial output — and following the data, many companies are pretty stoked about the year to come.
What does this mean?
Over in the United States, factories ramped up the pace of production in December to eleven-month highs. Not to be outdone, eurozone industrial production increased at the fastest rate in at least twenty years, (tweet this) helping 2017 become the best year on record for producers in the currency bloc. Chinese producers also reported faster output growth (although the sector did hit a few bumps in 2017), and factories in India saw the sharpest increase in new orders since 2012. And with new orders picking up in all the major economies, it looks like production lines will be going at it hammer and tongs in 2018.
Why should I care?
For you personally: In a number of developed economies, unemployment is currently at its lowest level in decades.
In major economies like the US and the UK, companies are hiring and hiring to help meet growing demand from clients for their products and services. All these vacancies are obviously great news if you’re looking for a new job — although the low rate of accompanying wage growth is puzzling, given that there are relatively fewer people looking for work.
The bigger picture: Strains on capacity could stoke inflation and prompt central banks to act.
Across the globe, factories are hinting that the cost of producing their goods has started to jump as overall demand increases faster than they can keep up with. If sustained, that overheating should lead to higher price inflation, which would typically prompt central banks to increase interest rates (which the Federal Reserve is already expected to do, and which the European Central Bank could move closer towards by slowing down the pace of quantitative easing).